The Indian startup ecosystem is maturing, with investors adopting a more pragmatic approach.
India saw a startup boom between 2013 and 2015, with funding reaching a peak of over $500 million in 2015. In 2016, this investment saw a decline. Many feel that the heyday of startups is over and the funding decline will continue to the point where once again the startup ecosystem in India will be stagnated. However, this is unlikely to occur as the waning optimism has brought about practicality that will serve to create a stronger innovation and funding ecosystem. The following are the trends I think will continue to dominate:
Wonderful companies, fair prices
Warren Buffet famously said, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price”. Funding patterns in recent years suggest that a lot of investors who had entered did not understand the difference between truly great companies and technologies, and were instead being motivated by a fear of missing out. One of the emerging trends will be the drying up of series A and series B funding for all, except the top companies which have demonstrated success. This rationalisation is now taking into account the facts around the Indian startup ecosystem. A lot of companies in the past were being funded for being exact replicas of successful American or Chinese companies, the assumption being that what has demonstrated value in other markets will continue to do so here. This assumption is largely well founded; the chance of a functioning business model to be replicated is indeed higher.
Esta historia es de la edición June 2017 de Indian Management.
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